Telsey cuts Ethan Allen stock target to $30 on Q3 sales miss

Tuesday, Telsey Advisory Group adjusted its price target for Ethan Allen Interiors, Inc. (NYSE:ETD), reducing it to $30.00 from the previous $32.00 while keeping a Market Perform rating on the stock. The revision followed Ethan Allen’s third fiscal quarter earnings per share (EPS) falling $0.06 short of Telsey’s forecasts, with sales and profitability slightly under expectations. The company experienced a 2.5% sales decline during the quarter, attributed to a double-digit decrease in order intake in January and February. Although there was a partial recovery in March, helped by a 25% off upholstery promotion, order intake weakened again in April due to lower consumer confidence and the timing of Easter. According to InvestingPro data, despite these challenges, ETD maintains a "GOOD" financial health score of 2.92, with particularly strong marks in profit and cash flow metrics.Want deeper insights? InvestingPro subscribers have access to 10 additional ProTips and comprehensive financial analysis for ETD.

Ethan Allen’s tariff exposure is relatively contained, with 65% of its products being duty-free, either manufactured in the U.S. (40%) or exempt from tariffs in Mexico (25%). The remaining exposure comes from imports from Honduras (10%) and other countries such as Indonesia, India, and Vietnam (25%). The company has been proactive in mitigating tariff impacts through vendor negotiations and reducing shipments from China, which represents less than 5% of its products. Despite these measures, Ethan Allen is expected to pass through some price increases later in the year to manage additional costs. In February, the company implemented a 4.5% price increase to counteract inflation. The company’s impressive gross profit margin of 60.8% suggests strong pricing power and operational efficiency in managing costs.

The report indicates that the disappointing third fiscal quarter results, combined with an 11% drop in order intake following a 14% rise in the previous quarter, are likely to put short-term pressure on Ethan Allen’s stock. However, looking ahead to fiscal year 2026, Telsey expresses confidence in the company’s ability to handle the incremental costs from tariffs. The concern remains over the ongoing trend of weakening traffic and sales.

Ethan Allen’s financial health is noted to be solid, with a clean balance sheet that includes $183 million in cash and short-term investments, and no debt. The stock currently offers an attractive dividend yield of 6.73%, and has maintained dividend payments for 30 consecutive years. Trading at a P/E ratio of 11.23x, the stock appears undervalued according to InvestingPro’s Fair Value analysis. The revised 12-month price target of $30 is based on applying a price-to-earnings (P/E) multiple of around 12.5x to Telsey’s fiscal year 2027 EPS estimate of $2.40.Discover more about ETD’s valuation and growth potential with InvestingPro’s exclusive Pro Research Report, part of our comprehensive analysis of 1,400+ US stocks.

In other recent news, Ethan Allen Interiors Inc . disclosed its financial results for the first quarter of 2025, highlighting a shortfall in earnings per share (EPS) compared to projections. The company reported an EPS of $0.38, which did not meet the anticipated $0.41. Additionally, consolidated net sales were $142.7 million, slightly below the forecast of $143.55 million. Despite these challenges, Ethan Allen maintains a strong cash position with $183 million and no outstanding debt. The company has also announced a quarterly dividend of $0.39 per share, yielding 5.4%. In response to the earnings miss, Ethan Allen’s stock experienced a decline. Analysts from KeyBanc Capital Markets and Telsey Advisory Group discussed the company’s tariff exposure and marketing strategies during the earnings call. Ethan Allen remains cautiously optimistic about future trends and plans to introduce new products over the next 12 months.

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